Berkshire Hathaway Inc. has undertaken a massive buying spree, increasing its shares in multiple companies as fears of an economic recession have driven stock prices downward.
In the first quarter of 2022, the company greatly increased its shares of Occidental Petroleum Corp. and Chevron Corp. and continued to add to its position in Apple Inc. Apple stock prices have fallen by almost 10 percent in the past month. Berkshire Hathaway has also taken stakes in HP Inc. and Citigroup Inc., among others.To execute these purchases, the company has drawn from its near-record cash savings. At the end of the fourth quarter of 2021, the company had $146.7 billion saved, which was reduced to $106.3 billion in the first quarter 2022.
Of particular note are the company’s investments in the energy industry, at a time when multiple factors have converged to result in global oil scarcity and record prices. With global oil prices trading near $110 per barrel as of May 18, investments in Chevron and Occidental Petroleum rank among Berkshire Hathaway’s top ten holdings. The expansion of these positions suggests that the company believes oil prices will remain high for the foreseeable future, allowing the fuel companies to continue the major growth in value seen over the past six months.
For many familiar with the investing philosophy of Berkshire Hathaway CEO Warren Buffett, these moves are expected. Buffett is famously known as a “value investor,” favoring stocks that he believes are underpriced due to contingent circumstances of the market. Buffett is known to counsel investors to “be greedy when others are fearful,” and he is prone to buy dips in the stock market at perceived bargain prices.
With the bull market of the past two years driven by low interest rates and economic stimulus, Buffett has had little opportunity to practice this philosophy of investment. With many now fearing that the U.S. economy is entering a period of recession, Buffett has seized the moment to buy stocks at lower prices, after years of trepidation caused by the market’s bullish temperament.
Berkshire Hathaway finally divested its last remaining shares of Wells Fargo & Co., ending a process which has been underway since 2019 as the investment bank is increasingly burdened by scandals and mediocre stock performance. It’s the end of a decades-long bet on this particular bank, and the retreat of Berkshire Hathaway from Wells Fargo has occasioned investments in numerous competing banks.
In addition to major stakes in Bank of America Corp. and American Express Co. (both of which are in the company’s top four stock holdings), Berkshire Hathaway also purchased 55 million shares in Wells Fargo & Co.’s rival, Citigroup, in the first quarter of 2022.
